Is Trump Initiating Trade War With Our Closest Allies?
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Trade, Storck Harbor scene (presented at: WindermereSun.com) -
Boats for cargo (presented at: WindermereSun.com)
Dear Friends & Neighbors,
Trade, Storck Harbor scene, 17th-18th century world trade, Southern harbour scene with merchants (presented at: WindermereSun.com)
Boats for cargo (presented at: WindermereSun.com)
(Please click on red links & note magenta)
President Donald Trump’s recent tariffs on steel and aluminum does not adhere to the traditional Republican party lines of free trade. The idea of these tariffs have spurred much hot debates in the U.S. over whether it’s a boon to American workers or whether it’s the beginning of a trade war? In the video below, Greta Van Susteren examines the pros, cons, and history of tariffs on imports into the U.S. (or exports from other countries).
For the first time since 1930s, the world has come closest to a full-scale trade war. The Smoot–Hawley Tariff or Hawley–Smoot Tariff, was an act implementing protectionist trade policies sponsored by Senator Reed Smoot and Representative Willis C. Hawley and was signed into law on June 17, 1930. The act raised U.S. tariffs on over 20,000 imported goods. The Act and following retaliatory tariffs by America’s trading partners were major factors of the reduction of American exports and imports by more than half during the Depression. Although economists disagree by how much, the consensus view among economists and economic historians is that “The passage of the Smoot–Hawley Tariff exacerbated the Great Depression.”
As described in wikipedia, in italics: A trade war refers to two or more states raising or creating tariffs or other trade barriers on each other in retaliation for other trade barriers. Increased protection causes both nations’ output compositions to move towards their autarky position. Some economists agree that certain economic protections are more costly than others, because they may be more likely to trigger a trade war. For example, if a country were to raise tariffs, then a second country in retaliation may similarly raise tariffs. An increase in subsidies, however, may be difficult to retaliate against by a foreign country. Many poor countries do not have the ability to raise subsidies. In addition, poor countries are more vulnerable than rich countries in trade wars; in raising protections against dumping of cheap products, a government risks making the product too expensive for its people to afford.
French President Emmanuel Macron says the European Union must react quickly if the US goes ahead with its proposed tariffs on steel and aluminum. Macron added that Trump’s proposed measures amount to economic nationalism in which all sides lose. German government spokesman Steffen Seibert also said a hike in US import duties for European-made products will affect international trade flows, European industries, as well as workers and consumers on both sides of the Atlantic. He stressed that Germany will consult with its European partners about the next steps. While Trump’s measures have been condemned by most European countries as well as the World Trade Organization and the International Monetary Fund, the US president has warned that tariffs on European cars might also increase.
The outcome of cost vs. benefit resulting from this move remains to be seen. One cannot help but wonder if President Trump is in need of a history lesson. Or perhaps President Trump is attempting to make America as great as 1930 again.
Gathered, written, and posted by Windermere Sun-Susan Sun Nunamaker
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